Johnson & Johnson (JNJ) — This pharmaceutical company is a leader in the medical device and consumer products industries. JNJ stock is a member of the Dow Jones Industrial Average and is typically considered defensive in nature compared to other industrials.
JNJ stock jumped 5% on Jan. 26 after the company reported its results for the fourth quarter. While sales fell 2.4% and slightly missed the mark, Johnson & Johnson delivered higher-than-expected Q4 earnings and profit guidance for the full year.
Following the announcement, S&P Capital IQ Equity Research reiterated its “Buy” rating on JNJ stock and its 12-month target of $120. Its analysts also revised their 2016 earnings estimate to $6.50 per share, up from $6.42.
Revenues have been negatively impacted by foreign exchange rates, but Capital IQ notes Johnson & Johnson is “uniquely situated with unmatched depth and breadth in growing global health care markets.”
The company has a strong drug pipeline with 10 new drug filings expected by 2019. And in January, it announced plans to cut about 4% to 6% of its global workforce as part of a restructuring effort estimated to result in savings of up to $1 billion by the end of 2018.
In a stock market with negative overtones, JNJ stock stands out as an exception. The bullish cup-and-handle pattern is unusual, even in a defensive industry like pharmaceuticals.
The formation began in December following a run up to a 52-week high above $105. JNJ then consolidated with a low of about $94 and resistance at $105.
A break through this resistance line renders a trading target of $115, which would result in a gain of almost 10%.
Those seeking a quality long-term investment with an above-average dividend yield should also consider purchasing JNJ stock as a cornerstone investment in a traditionally defensive industry. Johnson & Johnson pays an annual dividend of $3 per share for a forward yield of 2.9%.
